Compensation Unites Employees After a Merger

Compensation isn't just a force that reacts and responds to cultural change. It also can drive that change as well, as Westinghouse Furniture Systems discovered in 1991, following its aggressive acquisition of three other companies.

According to Anthony D. Greco, the company's director of executive resources and development, within two years, Westinghouse had acquired three other office-furniture manufacturers, renamed itself The Knoll Group, and found itself with a diverse work force of 4,400 employees worldwide. Not only were the employees accustomed to the culture of their previous employers, but they also were accustomed to their compensation practices.

"One big step in unifying these very different organizations during these difficult times was the introduction of a new compensation system," Greco explains in Rethinking Corporate Compensation Plans, published by The Conference Board. "We couldn't establish a unified strategy if salespeople from the four companies were compensated in four different ways," he writes.

The company began by developing a cross-functional team of individuals to review the four existing compensation plans and combine the best elements of each into one overall program. "We decided against any one plan, because that could create additional conflict and resentment," Greco explains.

Throughout this process, The Knoll Group solicited extensive feedback from sales employees. This not only helped employees become familiar with the compensation plan as the company developed it, but it also allowed the company to achieve the necessary buy-in. Greco says that the communication effort was successful because the sales managers—not the human resources department—were responsible for communicating the changes to their direct reports.

The second step undertaken to unite the four cultures was an overhaul of the company's benefits plan. This included shifting all hourly workers to a salary-continuance program. This means that exempt employees are paid even if they're ill and miss work.

With the new benefits and sales compensation plans nearly complete, the company now is dismantling the rigid salary-grading systems that existed in each of the four companies and is implementing a single broadband structure. By doing this, "we hope to encourage more movement within the company, so individuals will expand their knowledge and develop new skills," says Greco. When complete, the company hopes to have condensed approximately 30 grades for exempt associates into just five bands.

The process of creating a unified compensation structure has been slow, but The Knoll Group expected a transition period. Extensive employee communications are helping ease the process considerably. In the long run, if these efforts are successful, employees will forget about how things used to be done in the old companies and realize that they're united under one common vision.